9 Signs Home Ownership Isn’t for You
Posted by Gail | Filed under Home Buying
Owning a home is the big dream for so many people. But sometimes home ownership is a big ol’ pain in the arse. Like when your shingles blow off in a windstorm. Or the furnace breaks. Or you’re trying to sell and no one wants to buy so you can’t move and get on with your life.
Home ownership isn’t for everyone. Some folks are happier and better off renting. There’s nothing wrong with that choice. And don’t fall for the crap that you’re throwing your life and money away. Just point out that of your best-friend’s $2,100 a month mortgage payment, $2,084 is going to interest at least for the first few years.
Before you jump into the home-ownership pool, it would behoove you to really think about taking such a big step. Are you really committed to home ownership? Not the dreamy, picket-fence home ownership everyone is in love with, but the paying for all the crap that happens home-ownership.
1. You don’t make enough. People are under the misconception that home ownership costs the same as renting. It does not. When you compare renting to owning a home in the same area, of the same quality, home ownership is more expensive. According to the Stats Man, Homeowners spend $57,649 a year compared to renters who spend $32,536, which is a significant difference (over $25,000). Just being able to make the mortgage payments isn’t enough. If you don’t add up all the other costs with which you’ll be faced, you may find yourself house poor.
2. You have a variable income. If you find that your income has some slow periods when you have trouble making ends meet, taking on a home may be the straw that breaks your cashflow’s back. Most people with a variable income, unless it’s very high, find budgeting difficult. Taking on home ownership – a mortgage, taxes, insurance, utilities, maintenance – means taking on a ton of stress.
3. You work in an industry where employment is seasonal or erratic. Ditto above. Unless you really sock it away while you are working, you may find it hard to keep up with the financial demands of ownership.
4. You don’t have the time, skills or desire to deal with home maintenance. There is always something to be done on a house. There are gardens to be weeded, walls to be painted, lawns to be cut, plumbing to be fixed, curtains to be replaced, roofs to be repaired, snow to be shoveled, carpets to be cleaned, furnaces to be maintained… the list goes on and on and on. Home maintenance can be expensive. One rule of thumb is to estimate between 3% of the value of your home every year to keep it in tip-top shape. So on a $200,000 house you’d need to include about $500 a month in your budget for maintenance. If you can do it yourself, you’ll save on labour. If you must pay someone else, your costs will be higher.
5. You’ll wipe out all your savings. Some people will do ANYTHING to get into a home of their own. They take money from their retirement savings plans. They annihilate their emergency funds. Once they’re there, expenses start cropping up and they have no safety net in place to see them through. If buying a house gobbles every red cent you’ve managed to squirrel away, you should wait until you can own a house AND have a safety net.
6. You move often. If you work in a career that has you relocating often, the costs of buying and selling are prohibative. Nomads live in tents for a reason. Getting in and out of home ownership (sales commission, closing costs) can wipe out any equity you’ve built up, assuming the market has been going up in your area. And if the market’s taken a turn for the worse just when you’re pulling up roots again, you’ll eat the loss.
7. You can’t afford to own in an area in which you would like to live. For the sake of home ownership, people move far away from friends and family, from their jobs, from the lives they love. They become house-poor in a place they don’t even want to live. And they add huge commuting costs both in terms of money and time.
8. You’re not financially responsible. You’d think this would be a given, wouldn’t you? Not so much. Loads of people who are clueless about their money have bought homes. They haven’t had the discipline to save up a healthy down payment. They don’t even know for sure how much they make each month. They don’t pay their property taxes on time. And they haven’t given a thought to what they’ll have to do to keep the place from falling down.
9. You love being able to write a cheque for rent and then not sweat the details. If you’re a gad-about or hate routine, home ownership may not be for you. Ditto if you’d rather travel than buy furnace filters, shop for shoes than snow shovels, or go back to school than refinishing the floors. If home ownership is going to get in the way of other things you want to do with your life and your money, you’ll only end up resenting your house. So if Saturday morning in a café with a latte is more attractive than heading out to cut the lawn, stick with renting.